Saving public services while saving cash

Austerity Britain is facing even deeper cuts in public spending requiring technological innovation, as Dan Jellinek reports


Public bodies are used to dealing with cuts, but the level of savings required by current austerity programmes is unprecedented.

New technologies, from mobile to cloud, can help save cash, but some investment often needs to be found up front. It is down to managers to show there is minimal risk and that savings will be real – the all-important business case.

Glyn Evans, former corporate director of business change at Birmingham City Council, helped develop a new methodology – CHAMP2 – to ensure his projects realised their intended benefits.

“You need to take a very clear view of the cost not just of the technology, but of future new staffing structure and costs in changing from the existing structure,” he says. “And it is equally important to get a clear view of the benefits, divided into financial benefits, efficiency benefits and service-improvement benefits, such as increasing customer satisfaction.”

But once a case is made, the work is not over. “To a certain extent, developing a business case is easy,” says Mr Evans. “It’s getting the benefit out that is difficult because most of the benefits in a service-based project, which is pretty much every project in local government, actually occur after it has been disbanded.”

As part of CHAMP2, every benefit had a “benefit card”, he says. When the project wound down, each card was handed over to a manager who would carry on being responsible for its delivery.

However, this kind of long-term approach is in danger of being lost in the gloom of austerity. “I think the whole sector has missed a trick because we have been so focused on saving money, we have taken our eye off the potential for transformation. And transformation can save you more than cuts,” says Mr Evans.

One of the reasons for this is revenue budgets are being slashed and it is difficult to use public sector capital budgets – money to buy assets such as new buildings – to invest in improving services, even though this is something the private sector does all the time, he says.

“My fear is there is not enough capacity now to transform services – financial capacity, people capacity – so change becomes impossible and you are stuck in a rut,” he adds.

The concept of shared services has been around for a while, but austerity has placed a large rocket underneath it

One way to unlock money in the public sector is to share costs by sharing the management and running of services with one or more public or private partners. The concept of shared services has been around for a while, but austerity has placed a large rocket underneath it.

Local authorities tend to share services on an ad hoc basis, but for central government, the opportunity to share back-office services, including ICT, has recently been formalised with the creation of a joint-venture company between the Cabinet Office and outsourcing specialist Steria.

Shared Services Connected Ltd (SSCL) is owned 75 per cent by Steria and 25 per cent by the government. It draws on experience from a similar arrangement between Steria and the Department of Health, NHS Shared Business Services, a 50-50 joint venture set up in 2005 to run back-office services for NHS bodies in England.

The new company, which is intended to expand to offer services across the whole public sector, will start by delivering shared procurement, finance and HR services to up to 160,000 users in 13 bodies, including the Department for Work and Pensions, and the Department for Environment, Food & Rural Affairs.

Around 1,200 former civil servants have transferred to the new company, which Steria says will enable economies of scale by adopting common processes and systems such as a shared financial software platform, as part of a range of civil service efficiency reforms aimed at saving up to £600 million a year.

Some of these savings might come from reducing the staff count, though Hilary Robertson, business process services strategy director at Steria, says it is too early to say exactly how many jobs might be cut.

But the real key to savings will be in the ability to analyse business data across all its partners and customers, a feature shown by the NHS project to yield surprising results, Ms Robertson says.

“You would find different organisations were paying different prices for the same product, such as a heart valve, from the same company,” she says. “So the big saving opportunities come about from building a single version of the truth which allows you to ask, could our spend be better?”

There have been other initiatives to improve the way government buys ICT, including moves by the Cabinet Office to break the hold of a few giant companies on major contracts, breaking projects down into smaller chunks. It has also set an “aspiration” to let out 20 per cent of its ICT spend to small and medium-sized business by 2015.

These measures were reported by the National Audit last year to have saved the government £354 million in 2011-12, though they are not without their own challenges.

“The government is trying to break IT into more manageable chunks, so it’s something you can control, you can manage, you can deliver,” says Steve Williams, director of IT audit at the National Audit Office. “But this means there is certainly a change in the risk profile – a lot more stress on the ability of departments to manage a range of suppliers, rather than one large systems integrator.”

Echoing Mr Evans, Mr Williams acknowledges that a narrow focus on cost and savings may not always be the best way of assessing the value and potential of technology to revolutionise modern public services.

“When you look at transformational activities, the place where the value is realised may not be in the same department, it may be across multiple departments”, he says. “That is part of a new audit framework we are trying to develop – to assess technology-enabled services a bit differently.”

CASE STUDY

TECHNOLOGY ON BOARD

Some technology challenges faced by Southampton Solent University are distinctive, such as the need for its maritime academy students to access learning materials through weak internet connectivity on board ships.

Others, such as the need for pervasive wireless connectivity on land, are shared by all modern universities, says the university’s ICT director Paul Colbran. “We need to make sure the IT just works when students demand it,” he says.

Students also expect sophisticated technology-enhanced learning. “Rather than a traditional lecturer delivering learning material in front of a screen, they want access any time of day with lecture capture and other digital learning materials,” Mr Colbran says. “It opens up a whole new ball game of challenges in areas like copyright.”

With these new demands comes a need for new investment, but the university recognises that finding the money is not optional, as a technology culture is essential to its competitiveness.

“There had been under-investment in IT for a number of years, so I came with the viewpoint that we are effectively starting with a blank sheet of paper, looking not at IT today, but ten to fifteen years down the line,” he says.

“IT used to fit under library services, but now Solent recognises the need for it to be a department in its own right. I sit on the top table and I am invited to explain my strategy to senior managers. There has been a complete shift in the past five years – and it’s the same for many institutions.”

CASE STUDY

MOTHER OF INVENTION

When the London Borough of Havering was looking for a new IT chief in 2009, managers saw nearby Newham was innovating and had an idea: why not ask Newham’s IT director to work for them too?

So Geoff Connell ended up running IT for both councils. “I looked at what they had and found it was largely coming to the end of its life, and didn’t support the council’s objectives,” Mr Connell says. “So I said, ‘Throw it all out – I know what to do, because I’ve already done it’.”

While the arrangement started off as two separate operations with a shared director, as trust grew, staff teams were merged and now there is a shared management committee.

The move has saved 36 per cent of ICT costs, Mr Connell says, of which a “fair chunk” comes from staff cuts, but with major savings too on procurement and consultancy, and the two councils are able to share whole systems such as business intelligence.

If sharing is so effective, why don’t more councils take the plunge?

“Turkeys don’t vote for Christmas,” Mr Connell says. Many councils feel they are unique and cannot share, but much of this is myth, he says. “Newham is a Labour borough and Havering is Conservative, but the reality was their desire to make the savings, to protect front-line services, outweighed political differences.”

In any case, necessity – or austerity – is the mother of invention, he says. “In the past, people haven’t had to do it, but now we do.”